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CORRECTED-UPDATE 1-Pirelli forecasts 11 pct profit rise in 2015 on strong premium sales
February 12, 2015 / 5:47 PM / 3 years ago

CORRECTED-UPDATE 1-Pirelli forecasts 11 pct profit rise in 2015 on strong premium sales

(Corrects to remove reference to Goodyear in par 8, due to report results next week)

MILAN, Feb 12 (Reuters) - Italy’s Pirelli, the world’s fifth-largest tyremaker, on Thursday forecast an 11 percent rise in 2015 operating profit after last year’s earnings met expectations as strong sales of premium tyres offset weakness in Latin America.

Pirelli, which makes tyres for motorcycles, cars and Formula 1 racing cars, expects to grow revenues by up to 6.5 percent to around 6.4 billion euros ($7.30 billion) this year.

It forecast earnings before interest and tax, after restructuring costs, of around 930 million euros, while investments are seen at below 400 million euros.

The company has managed to boost margins in the past few years even though car sales in Europe fell to historic lows. It has done this by focusing since 2010 on more upmarket tyres for brands such as Mercedes, Audi, and BMW - luxury carmakers which have weathered the downturn better than their mainstream rivals.

Pirelli said 2014 operating profit rose 6.8 percent to 838 million euros helped by its focus on higher-margin products, a better price mix and efficiency measures.

Analysts were expecting a 837 million euro operating profit, according to a consensus provided by the company.

Revenues stood at 6.02 billion euros, down from 6.06 billion the previous year and compared with an analyst consensus of 6.05 billion euros.

The Italian group’s results compare with weaker results from France’s Michelin, which pledged to step up cost-cutting efforts after cut-price competition hit profits more than expected last year.

Pirelli’s results were released after the Milan stock market closed on Thursday. The stock, which is up 12 percent in the year to date, closed up 2.4 percent at 12.9 euros earlier in the session. ($1 = 0.8767 euros) (Reporting by Agnieszka Flak; editing by Francesca Landini and Jane Merriman)

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